Senator questions why federal wind leases follow different rules

11 13, 2012 by Houma Courier

If prospectors are allowed to pull energy from above the surface of the Atlantic Outer Continental Shelf, then they should be able to explore below the waterline, too, according to U.S. Sen. David Vitter, R-La.

While the federal government does not allow offshore oil and gas leasing in the OCS, it is allowing lease sales for wind energy.

Vitter said all energy production in the Atlantic should be treated equally. He has joined fellow GOP Sen. Lamar Alexander of Tennessee in asking Interior Secretary Ken Salazar for the “economic reasoning” behind the decision.

In a letter to Salazar, they also request data on the economics of the wind lease sale to compare with “the value of a similar lease for oil and gas on equivalent acreage.”

“The administration has a habit of picking energy industry winners and losers, and we want an explanation,” Vitter said. “Secretary Salazar should at least be able to defend the economics of the lease sale for wind energy.”

For example, Vitter said the federal government receives significant revenue from royalties for offshore oil and gas production in the form of rents, royalties, bonus bids and taxes.

The royalty rate oil and gas companies must pay is between 12.5 percent and 18.75 percent.

“Can the same be said for this offshore wind project?” Vitter asked.

In October, “as part of the Obama administration’s all-of-the-above strategy to expand safe and responsible domestic energy production,” Salazar said his Bureau of Ocean Energy Management reached agreement on a lease for commercial wind energy development.

The lease covers 96,430 acres in federal waters about 11 nautical miles off Delaware.

It is the first lease completed under the Interior’s Department’s Smart from the Start approach to facilitate “environmentally responsible” offshore wind development along the Atlantic Outer Continental Shelf.

Salazar said the Obama administration has increased domestic oil and gas production annually over the past four years, with domestic oil production higher than any time in almost a decade and domestic natural gas production at its highest level ever.

The lease grants Bluewater Wind the exclusive right to submit one or more plans to the Bureau of Ocean Energy Management to conduct activities in support of wind energy development. In its original project nomination, Bluewater proposed a 450-megawatt project, with estimates that the project could generate enough power to supply electricity for over 100,000 homes. But those estimates could fluctuate as the project progresses, officials say.

Vitter said he’s still trying to find out how much the project would generate in revenue for the federal government over the next 10 years.